Care for parents - Helping them financially

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As parents retire and age, adult children have the additional responsibility of looking after their physical, emotional and financial well-being. Care for parents, whether independent or dependant, includes three important areas
  • Medical Care
  • Investment and Income Management and
  • Estate Planning
I have expanded briefly on these areas.

Medical Care 
Everyone goes through a stage which requires long term medical care of parents. One needs to plan on financial aspects of such care. In the good old days of joint families, at least physical care was never an issue as miscellaneous aunts and siblings could take care of the elderly. In the absence of such a support structure, it is necessary to plan in advance for a scenario where one of your parents would require long term medical care. The cost of care includes not only actual medical expenses but also the cost of lost hours of work and the cost of arranging external arrangements like appointing full time nurse, infrastructure for support etc. I strongly recommend medical insurance where possible. Such insurance may be expensive for the elderly, but invaluable when it comes to covering recurring medical expenses. You get tax deduction up to Rs.15,000 for insurance purchased for parents (increased to Rs.20, 000 if parents are senior citizens i.e. above 60 years of age).

Such mediclaim needs to be supplemented by a medical fund. Many expenses including home care are not covered by mediclaim.You may put aside a small sum of money every month from your salary towards such a fund or if your parents already have funds available with them, you can create an account with self or sibling as second holder. This will help you operate the account in case your parents are physically unable to operate the same at the time of emergency. Ideally such funds should be fully invested in debt instruments. Besides this you and your siblings must be aware of what needs to be done in case of a sudden emergency. It is important to keep documents containing medical history, insurance papers and phone numbers of doctors and hospitals handy.

Managing Investments
You can help parents with their finances without compromising their financial independence, especially as they enter the retirement stage. Help should ideally be advisory in nature. Provide your parents with options, inform them of the pros and cons but let them decide .Help them invest in inflation hedged assets like equities to ensure that they no not outlive their savings. It would help to get a financial plan from an independent financial planner. This way you not only evaluate their financial situation, but will also be able to plan the size of your own medical and contingency funds.

Estate Planning 
Indians rarely discuss estate planning with their parents. It is important to tread carefully in bringing this up with your parents. This is their money. You could open the topic by informing them of your own estate plan, discussing advantages of having one or by enumerating examples of the troubles of not having a Will in place. If you feel they're uncomfortable talking with you, ask them to see a financial planner. It is important to ensure that their wishes concerning their assets and belongings are fulfilled. A good estate attorney can help them update their wills, or create them if this has not yet been addressed. Once a will is created, appointment of nominees and second holders in line with the Will is important.

At least one family member should be  aware about all assets, liabilities, sources of income, loans given or taken by the parent. This will assist a great deal in arranging funds in case of emergencies as well distribution of estate in case of death.

Financial well-being of adult children as well as their elderly parents depends on a well thought of plan. Start planning now- sooner the better.

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